Where do regulations go when Congress shutters an agency?

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The way the federal government spends money rarely changes until a crisis comes along. Arguably, we’re already there with federal debt service (interest) payments exceeding defense spending, and on their way to breaking $1 trillion.

As Congress stumbles toward the reality that the federal government cannot do it all and looks for where to cut back, a practical question arises: What happens to regulations when the federal government shutters the agencies that enforce them?

That was one problem with which Alfred Kahn had to deal. He was appointed chairman of the Civil Aeronautics Board (CAB) in the 1970s. CAB was an agency that did great harm to the sector it regulated. “Nobody could fly an airplane commercially on any route without specific permission from the Civil Aeronautics Board, and price competition, cutting prices, was illegal,” he told CNN long after the fact.

Kahn believed the agency’s abolition would solve a great deal of the problem. “I will consider myself a success in this job if there is no job when I leave it,” he told a no-doubt shocked reporter at Time magazine. He got his wish. CAB was shuttered by the Airline Deregulation Act of 1978.

The Airline Deregulation Act removed government control over fares, routes, and market entry and exit. Without the need to ask “Mother-may-I” permission of the CAB, competition increased. Prices were lowered and air travel was democratized.   

Certain consumer protections and safety regulations remained in place. The Federal Aviation Administration (FAA) regulates aviation safety (inspections, audits), aircraft maintenance, pilot training and certification, air traffic control, and airport operations. FAA requirements also apply to advertising practices, and to compensation and other remedies with respect to flight cancellations, delays, denied boarding, baggage handling, and procedures.

The Transportation Safety Administration’s (TSA) rise after 9/11 amplified security regulations governing passenger and baggage screening. Some have since sought to abolish the TSA and to privatize its functions.

So, while many aviation regulations were either abolished or significantly modified during late 1970s and early 1980s deregulation, others remain. In the FAA’s case, its turf has also expanded to encompass new technologies like drones. Some seek a rebirth of legacy CAB-style regulation, such as the Biden administration Competition Council’s desire to restore price regulation and other controls to the airlines. 

The CAB case study shows us that while legislation or administrative reorganization can end an agency and its rules, provisions for transferring certain functions, responsibilities, and assets to other agencies or departments within the federal government may be included, for good or ill.

Aside from the CAB, other examples may serve as case studies. There’s a little bit of abolition here and there, but mostly functional transfers.

In the 1940s, the Civilian Conservation Corps and the Works Progress Administration were abolished (now, alas, there’s Biden’s “American Climate Corps”).

In the 1970s, the Atomic Energy Commission, the Energy Research and Development Administration, and the Federal Energy Administration were merged into the new Nuclear Regulatory Commission and Department of Energy.

In the 1990s, the US Information Agency was ended and its functions integrated and moved to the Department of State in 1999.

In the 2000s, the Homeland Security Act disbanded the Immigration and Naturalization Service transferred its functions to three then-new creations: US Citizenship and Immigration Services, US Immigration and Customs Enforcement, and US Customs and Border Protection.

In the 2020s, we’ve managed to get rid of the so-called Board of Tea Experts, albeit nearly three decades after the Federal Tea Tasters Repeal Act first required it.

The first lesson to be gleaned from all this is that there’s not been all that much agency abolition or even deregulation. The second lesson is that Congress, in abolishing agencies such as the Department of Education and others now in the crosshairs, will need to take extraordinary pains to ensure that it is actually doing what it intends, and shrinking government’s ambit, spending, and rulemaking.

Ideally, what happens to an abolished agency’s rules is that they vanish. When Congress actually begins getting things undone, it will need to appreciate how things might not be so simple, and act accordingly (such as with privatizations and restorations of authority to states) to prevent the regrowth of “weeds.”

Certain umbrella actions like getting the federal government out of “services,” rolling back the spending and regulatory firehoses represented by grants and subsidies, and privatizations would vanish a large part of the federal enterprise and begin to address our budget crisis at the same time. The intent of “Terminator” legislation abolishing an agency must be crystal clear on such aims.